The twenty-first round of the FICCI-IBA Bankers’ Survey offered industry sentiment review for the outlook period January to June 2026. A total of 24 banks, comprising Public Sector Banks, Private Sector Banks, Foreign Banks, Small Finance Banks, and Cooperative Banks, participated in this round. The survey was conducted in the period January- February 2026. India’s banking sector continues to demonstrate resilience, supported by improved asset quality, strengthening capital buffers, robust retail and SME credit momentum, and early signs of revival in private capital expenditure. Against the backdrop of heightened geopolitical uncertainties, alongside evolving global liquidity conditions and steady domestic growth consolidation, the survey offers insights into credit outlook, sectoral credit demand dynamics, emerging risk perceptions, and the strategic priorities shaping the banking ecosystem.

The survey results suggest that the banking sector maintains a broadly constructive outlook on credit growth over the near term, supported by improving balance sheets, steady economic activity, and sustained demand across multiple segments of the economy. Most respondents expect the current monetary policy stance to remain broadly stable in the coming months, indicating a view that the existing policy framework remains appropriately calibrated to balance growth and inflation considerations.

Expectations regarding overall credit expansion remain positive, with banks anticipating continued momentum in non-food credit. Public Sector Banks appear particularly confident in the outlook, reflecting improved asset quality, stronger capital positions, and increasing traction in corporate lending. Private Banks demonstrate a balanced and selective approach to credit growth, while Foreign Banks display moderate optimism consistent with their focused exposure to corporate and institutional segments.

Sectorally, credit demand from services and retail segments is expected to remain a key driver of overall lending growth. SME credit demand is expected to remain particularly strong too, with respondents expressing high confidence in continued expansion in this segment. In contrast, industrial credit growth is expected to expand at a more measured pace, reflecting a gradual recovery rather than a sharp acceleration. The outlook suggests steady investment activity led by infrastructure development, manufacturing-linked sectors, and government-led capital expenditure.

Working capital demand, by contrast, appears more closely linked to trade cycles and operational financing requirements. Sectors such as textiles, automobiles, pharmaceuticals, engineering goods, and food processing are expected to drive industrial working capital borrowing, while services-related working capital demand is likely to be led by wholesale and retail trade, transport operators, tourism, and hospitality.